Africa and Asia forge stronger alliances

Expanding cooperation in trade, investment and technical assistance
From Africa Renewal: 
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Indian technicians explain manufacturing process to African participants in an Ethiopian workshop. Photo: UNDP/I. Rajeswary

In the Senegalese city of Thiès, a new enterprise, "Senbus," is assembling 30-seat buses for the domestic and regional markets. The first units of this first vehicle assembly factory in Senegal rolled out the plant's doors in September 2003, thanks to a partnership between Senegalese investors and Tata International, one of India's largest companies.

The factory is a "proud symbol of South-South cooperation," Indian Foreign Minister Digvijay Singh said at the inauguration ceremony. Senegalese President Abdoulaye Wade commended the Indian government for "knowing how to convince the Indian private sector to invest in Senegal, a brother country." He noted that such ventures fit the priorities of the continent's New Partnership for Africa's Development (NEPAD), which stresses collaboration between African and non-African countries. "Forward with the African private sector!" President Wade declared at the close of his speech. "Long live Senegalese-Indian cooperation!"

Senbus is but one example of Senegal's interaction with India. This year, Senegal's largest industrial enterprise, a chemicals manufacturer, is expected to export $155 mn worth of phosphoric acid to that country. Meanwhile, the Indian government is training Senegalese technicians and professionals and is supporting projects in rice, cotton, solar energy and new information technologies. It is exploring the feasibility of building a railway between Senegal's north and south.

The growing ties between Senegal and India reflect a wider trend. Across Africa, more countries are forging new relations with their counterparts in developing Asia. The examples are numerous:

  • Kampala, the capital of Uganda, hosts a Malaysian Business Centre, set up at the initiative of Malaysian businesses to explore mutual trade and investment opportunities.
  • China has 11 such centres throughout Africa, and over the past three years has given scholarships to more than 7,000 African students.
  • Some 2,000 Vietnamese agricultural and food security specialists are providing training in Benin, Madagascar, the Republic of Congo and Senegal.
  • In 2001, South Africa recorded $5.7 bn in trade with developing Asia, 12 per cent of its world total (19 per cent if Japan were included).
  • That same year, Guinea-Bissau earned more than half of all its export revenues from Asia, primarily through cashew sales to India and Thailand.

Asian countries also have been prominent in efforts to resolve Africa's armed conflicts. With developed countries reluctant to assign troops to UN peacekeeping missions, Asian armies have stepped in to help fill much of the gap. At the very beginning of 2004, there were 15,375 Asian troops, military observers and police posted to the UN's six active peacekeeping missions in Africa, accounting for 43 per cent of the total. In Sierra Leone, Asian peacekeepers comprise more than half.

Compared with just a decade ago, Asia now looms larger in Africa's field of vision. "For historical reasons, we used to pay attention only to Western countries," notes Mr. Kheri Iddi Milao, acting chief of the Zanzibar Bureau of Foreign Affairs, in Tanzania. "Now this has changed. We are shifting our eyes to Asia."

And Asia is looking in Africa's direction. Africa is "an increasingly close neighbour in today's shrinking world," said Mr. Tan Sri Bernard Giluk Dompok, minister in the office of Malaysia's prime minister, at the Third Tokyo International Conference on African Development (TICAD). Building stronger bridges between the two regions was one of the main themes of the 29 September-1 October 2003 conference.

The spirit of Bandung

Historically, ties between Africa and Asia are not new. For centuries, there was considerable migration and commerce among societies on opposite sides of the Indian Ocean. Trade and other economic relations between Africa and Asia "existed long before colonialism," noted Namibian Minister of Trade and Industry Jesaya Nyamu during a visit to Vietnam in May 2003. "It was the colonial subjugation of the 19th-century which came to destroy this harmonious relationship."

In reaction to colonialism, political issues came to the fore, as anti-colonial activists from the two continents began establishing contacts with each other in the early decades of the 20th century. In the immediate wake of World War II, a number of Asian countries gained their political independence. In solidarity, they championed the cause of freedom in Africa, most of which was then still under colonial rule. In that spirit, the first Asian-African conference was held in Bandung, Indonesia, in 1955.

In preparation for the 50th anniversary of that event, the foreign ministers of Indonesia and South Africa, joined by delegates from 41 other countries, reconvened in Bandung just two months before the TICAD meeting. The participants noted that while much progress has been made in the two regions over the years, especially in the political sphere, they still share daunting problems of economic and social development. "Despite the opportunities offered by globalization," the final communiqué concluded, "countries in Asia and Africa continue to be marginalized."

Economic models in a globalizing world

The relative success of some Asian countries in navigating the complexities of globalization, especially by the newly industrializing East Asian "tigers," has fascinated African leaders for some time. During the policy debates of the 1980s and 1990s over structural adjustment reforms in Africa, African ministers often pointed to the significant role of government economic involvement in East Asia. This was in contrast to the "Washington consensus" put forth by the World Bank, International Monetary Fund and other donor institutions, which pressed for sweeping liberalization and state curtailment.

By the mid-1990s, some of the donor institutions were beginning to acknowledge that strong public sector policies had indeed played a role in the "miracle" of East Asia's economic growth. They also started to concede the limits of market liberalization and the importance of building up state capacities in Africa.

At the TICAD conference, a number of African participants pointed to the attraction of the Asian development model as one of the factors drawing them towards closer ties with that continent. Asia's ability to forge strong public-private partnerships, noted Kenyan Minister of Planning and National Development Peter Anyang' Nyong'o, is "an experience which has helped Asian countries make tremendous strides in development."

"Given that our two continents, Africa and Asia, are faced with globalization in an era when pressures for liberalization are pretty strong," Mr. Nyong'o added, "we in Africa have a lot to learn from the Asian experience."

Ethiopian Prime Minister Meles Zenawi observed that when the first TICAD conference was held in 1993, Africa was implementing economic and political reforms under the guidance of the Washington consensus. However, the TICAD process has since "introduced an alternative development paradigm based on the successful development experience of many East Asian countries and thus helped expand the tool kits at the disposal of African development practitioners."

Minister Dompok of Malaysia, in an interview with Africa Recovery, said that his country is seeking to share such knowledge at a practical level. Technical training courses for African practitioners draw on Malaysia's long experience with development planning, in particular how government can work closely with the private sector, while at the same time maintaining a focus on "the social needs of the people."

Aid 'without conditions'

After Chinese President Hu Jintao visited Gabon in early February, Gabonese President Omar Bongo highlighted another reason why African countries value assistance from Asia. "It seems to me that the aid provided by certain countries is tied aid," he observed, commenting on the common practice by which many Northern donor agencies make their assistance conditional on the purchase of goods from the contributing country or on the implementation of specific policy reforms. In contrast, added Mr. Bongo, "cooperation with China comes without conditions, with mutual respect and regard for diversity."

With the exception of Japan (see box below), however, most Asian countries are secondary players in providing aid to Africa, since they face serious financial constraints of their own. To the extent they are able to give foreign assistance, the bulk tends to go to other Asian countries with which they have more strategic political and economic relations.

Despite these limitations, the vibrancy of some Asian economies appears to have led to an increase in their aid. The Republic of Korea, for example, more than doubled its overall foreign aid between 1995 and 2002, from $116 mn to $279 mn. Out of the latter amount, a modest $5 mn went to sub-Saharan Africa, although the year before it was $9 mn and Angola figured among Korea's top 10 aid recipients.

China is known to give significant aid to some African countries, but it does not release data on the overall value of its assistance. In addition, China has canceled some $1.3 bn in debt owed to it by 31 African countries.

In 2003, India established a new India-Africa Fund. Its goal is to allocate up to $200 mn in credits to various projects designed to promote African economic integration, within the framework of NEPAD.

Practical advice

Generally, Asian countries concentrate on providing Africans with knowledge and access to technologies. This may include scholarships and specialized training courses for Africans to study in Asia. Often, it also entails sending Asian experts to help train farmers, fishermen, small business people and other producers in new techniques for improving their output and efficiency.

India has long been a leader in this field. In 1964 it established the Indian Technical and Economic Cooperation (ITEC) programme, which has trained more than 10,000 Africans in Indian institutions in fields such as small-industry development, agriculture, new information technologies, financial management, diplomacy and employment planning. In recent years, ITEC has been training more than 1,000 people annually, with a majority of them generally coming from Africa. The programme has also supported projects in Africa itself, such as an entrepreneurship development centre in Senegal and a plastics technology demonstration centre in Namibia.

After South Africa, India has the second largest number of people living with HIV/AIDS in the world. And because it already had a developed pharmaceutical industry, India has become a global leader in the manufacture of inexpensive generic medicines to combat the disease. Indian companies are now working with South African pharmaceutical firms to supply cheap anti-retroviral medicines.

China, the world's largest developing country, has long had multiple ties with Africa. This has included providing a total of 65,000 Chinese contract labourers to various African countries over the years, as in the construction of the Tanzania-Zambia railway in the 1970s. Chinese workers are still being sent to Africa, but China is now placing greater emphasis on brain power. Visiting Addis Ababa, Ethiopia, in mid-December 2003 for a China-Africa Cooperation Forum, Chinese Premier Wen Jiabao announced that his government plans to increase the number of Africans it trains in various professions from 7,000 over the past three years to 10,000 over the next three.

In addition, Chinese agencies and state firms support projects on the ground in dozens of African countries. In Tanzania, for example, the China State Farm and Agribusiness Corporation has rehabilitated two sisal farms. "The soil is fertile, but its cultivation called for modern technology and management methods," says Mr. Han Xiangshan, head of the firm's African agricultural projects. "We have wide experience in sisal planting and processing . . . and brought our best technicians out here." These sisal farms are now regarded as the best-managed in Tanzania, and have helped boost the incomes of hundreds of local residents.

Malaysia first set up its Malaysia Technical Cooperation Programme in 1981. It now offers more than 90 courses annually in Malaysian institutions. From its inception until mid-2003, about 2,000 participants from 46 African countries have taken part. According to Mr. Dompok, these courses focus on transferring technical knowledge and improving management and planning skills. His country has sent experts to the predominantly rural Northern Province of South Africa to help strengthen local micro-credit schemes, an example, he said, of "how experience can be translated into solving some of the problems." Malaysia can, in turn, learn from the experiences of Africa, he added.

Vietnam has a "triangular" assistance arrangement under which it provides some 2,000 agricultural specialists to several African countries, with the costs borne by the UN's Food and Agriculture Organization. In addition, Vietnam provides hundreds of other technical experts, educational advisers and doctors to a score of African countries, with Algeria and Angola heading the list.

With the aim of improving cooperation with Africa, the government organized a Vietnam-Africa cooperation and development forum in Hanoi in May 2003. At the forum, Deputy Minister of Agriculture Bui Ba Bong noted that the Vietnamese advisers who go to Africa not only bring practical experience that is well-suited to Africa's development problems, but also a good rapport with rural people and an "endurance for the difficulties in living and working conditions."

Investment opportunities

Africa is benefitting from a growing Asian interest in the continent's investment opportunities. Because of the high profit rates that foreign investors can earn in Africa -- combined with improvements in Africa's investment codes, privatization of state enterprises and liberalization of economic management -- Asian investments began to mount in the early 1990s.

Firms from the Republic of Korea, for example, invested $214 mn in various African ventures between 1992 and 1995, and Malaysian firms increased their investments in Africa from $3.2 mn in 1992 to $30.3 mn in 1996. The Asian financial crisis of 1997-98 led to a momentary pause in certain Asian investment flows to Africa, but as a number of key Asian economies quickly recovered, so did investment activity.

Malaysia's giant Petronas oil company now has oil production or exploration ventures in a dozen African countries. This includes a 35 per cent stake in the consortium that last year began pumping oil from the Doba oil field in southern Chad, after building a 1,000-kilometre pipeline through Cameroon. According to Mr. Dompok, Petronas also currently operates some 1,600 petrol stations in South Africa and Botswana.

Among other projects, Malaysian companies are involved in the telecommunications sectors in Ghana, Guinea, Malawi and South Africa, palm oil production in Gabon, banking in Mozambique and tourism in Seychelles. In 2001, a Malaysian company started investing in a large textiles and clothing complex in a suburb of Namibia's capital, Windhoek, and began exporting textiles to the US market the following year. As the project expands -- with total investments eventually reaching $185 mn -- it may ultimately create several thousand local jobs.

A large delegation of Chinese businesspeople took part in the December 2003 China-Africa cooperation forum in Addis Ababa and during the event, 17 Chinese companies signed agreements with African counterparts worth a total of $460 mn. Up to that point, more than 600 Chinese businesses already had industrial, agricultural and trade operations in 49 African countries.

Asia's other large developing economy, India, also has extensive investments in Africa. As of 2002, Indian enterprises had a total of $330 mn invested in 43 projects in Egypt alone. Indian companies are active in chemicals ventures in Morocco and Tanzania, copper mining in Zambia, oil in Mauritius and Madagascar and telecommunications and textiles in Malawi. In Uganda, India is now the third largest source of foreign direct investment (after the UK and Kenya).

In 2003, India's state-owned Oil and Natural Gas Corporation made further investments in Sudanese oil exploration and production and won contracts to build a 720-kilometre oil pipeline and upgrade an oil refinery. The company's total investments in Sudan that year reached $1.6 bn -- an enormous sum for any African country, considering that all foreign investments to the entire continent reached only $11 bn the year before.

Looking to Asian markets

To African exporters, Asia is an enormous market that they have only begun to tap. Asian businesses, in turn, are beginning to more systematically explore how they can sell their goods in Africa, especially in countries where economic growth has been strong. Trade relations between the two continents are therefore driven by a dynamic of mutual interest.

Between 1995 and 2001, total trade between Africa and developing countries in Asia grew by nearly 50 per cent, from $20.9 bn to $30.1 bn. Both imports from Asia and exports to that continent grew over the period. The Asian financial crisis caused a dip in African exports there in 1998, since overall demand virtually dried up in a number of key Asian economies. But growth in African exports resumed the following year. Much of this was to the two largest Asian markets, India and especially China (see graphs). During the first nine months of 2003, total trade between China and Africa reached $13.4 bn, higher than the record $12.4 bn recorded for the whole of 2002.

Some of Asia's smaller economies have also seen a significant increase in their trade with Africa. Malaysia's trade with the continent tripled from $423 mn in 1993 to $1.4 bn in 2002. Vietnam's grew tenfold between 1991 and 2002, from just $15 mn to around $200 mn. The Republic of Korea's trade with Africa has remained fairly steady, but at a high level, averaging more than $5.6 bn annually between 1995 and 2001.

As a source of imports for Africa, Asia countries often are able to provide industrial equipment, fertilizer and consumer goods at prices far lower that those from Africa's traditional commercial partners in the North. For example, India, which is among Tanzania's top five sources of imports, mainly sells pharmaceuticals, transport machinery, consumer goods, construction materials, textiles and iron and steel. In the "Vietnam Town" section of Luanda, Angolans can readily buy motorcycles, steel products, electronics, garments, construction materials and other Vietnamese goods.

The competitiveness of Asian merchandise is a mixed blessing for Africa, however. When cheap Asian textiles or rice flood African markets, local producers often are hurt by reduced sales of their own goods. They argue that trade liberalization has exposed them to unfair foreign competition and urge their governments to impose higher duties on such imports to help protect African producers.

African exporters also complain that some Asian countries subsidize their agricultural production -- giving them a competitive edge in world markets that Africans generally do not enjoy. As well, they criticize the persistence of tariffs and other trade barriers that hamper the sale of African commodities in Asian markets. At the TICAD conference in Tokyo, Mr. Nyong'o, the Kenyan planning minister, pointedly noted that "for Africa to realize meaningful and sustainable economic growth, there is need for increased market access for African products into Japan and other Asian countries."

Such comments have elicited a positive response from some Asian officials. At the China-Africa forum in Ethiopia, Chinese Premier Wen Jiabao pledged: "We will further open our market, and grant duty-free market access for some of the commodities from the least developed countries in Africa." Mr. Dompok, the minister from Malaysia, commented to Africa Recovery that Africans are simply asking that markets be opened up to them. "That's the most meaningful way of helping Africans," he said, "to find a place for their products."